A consortium of investors, led by private equity player 3i, is in talks to pick up a 4-4.5% equity stake in Adani Power for Rs 1,800 crore. The power company, which is majority-owned by Adani Enterprise, is in the process of floating an initial public offer (IPO) and the stake sale is a precursor to the public issue.
The pre-IPO transaction will value Adani Power at nearly $10 billion, making it the most valued private sector power company in the country.
The consortium of investors includes Singapore’s Temasek and an infrastructure fund, according to sources. The Adani Group spokesperson declined to comment on the matter.
For 3i, this would be a follow-on fund infusion into Adani Power. The PE player has pumped Rs 900 crore into the power company since October 2007. It holds around 8.5% in the company, but this will be be diluted to 7.32% after the public issue.
3i may be looking at maintaining its holding in Adani Power through the pre IPO transaction, although this could not be independently verified. The PE player would need to invest an additional Rs 500 crore (out of the Rs 1,800 crore) in the pre-IPO deal.
In April, the London-based 3i Group announced the closure of its $1.2 billion 3i India Infrastructure Fund that invested in the power, roads, ports and airport sectors across the country. 3i had earlier invested in Adani Power through this fund.
If the pre-IPO deal goes through, the valuations of Adani Power would surpass those of Reliance Power and Tata Power.
At current valuations, Adani Power is the second most valued listed power company after public sector power generator NTPC. As per its filings with the market regulator Sebi, Adani Power is looking at raising capital by issuing around 29.7 crore shares through pre-IPO placement and the public issue.
Power sector companies commanded high valuations till January. But the stock market crash and the poor performance of Reliance Power post the IPO issue, led to a significant correction in the their stocks.
Source: Economic Times